What’s behind the recent drop in labor force participation?

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US economy unexpectedly loses 23K jobs amid Iran war | NewsNation Live

US economy unexpectedly loses 23K jobs amid Iran war | NewsNation Live

(NewsNation) — Hundreds of thousands of Americans have dropped out of the labor force in recent months, but a St. Louis Fed analysis suggests it’s not as simple as people giving up on their job hunt.

The labor force participation rate — the share of the population age 16 or older working or looking for work — fell to 61.4 percent in July, down a full percentage point since December and now at its lowest level outside the pandemic since 1976.

The number of people in the labor force fell by more than 260,000 in July after plunging by roughly 720,000 in June. Those exits helped push the unemployment rate lower, because people who aren’t actively looking for work aren’t counted as unemployed.

Economists have been watching the trend closely because falling participation can be a sign that more Americans have become discouraged and stopped looking for work — a concern heightened by the rise of AI and the hiring struggles facing recent college graduates.

Some see demographics — not labor market weakness — as the primary story. As the population ages, the participation rate is expected to fall because older Americans (55 ) work, and seek work, at much lower rates than those in their prime working years.

The Federal Reserve Bank of St. Louis analysis published last week examined why labor........

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